Speaking to ET Now, Choksey said several PSU banks—especially smaller ones—are trading at significantly cheaper valuations compared to mid-sized and large private banks and NBFCs, even as their recent quarterly results show improving fundamentals.
Falling rates aid banks, but execution remains key
Choksey noted that the easing interest rate environment is helping banks manage their liability costs better, provided asset-liability mismatches are controlled. “Lower cost of funds is clearly a blessing for lenders this year, but sustainable growth will depend on how well banks manage credit quality,” he said.
However, he believes the real acceleration in lending growth is visible among strong NBFCs and private banks that have successfully integrated fintech platforms into loan origination and customer acquisition.
Fintech adoption driving superior loan growth
Highlighting Bajaj Finance as a key example, Choksey pointed out that such players are delivering 22–25% CAGR loan growth, far ahead of industry averages. Their housing finance arms are also expanding at a similar pace, supported by technology-driven underwriting and distribution.
“The biggest differentiator is fintech adoption at the front end. Companies that grow systematically, keep NPAs low, and use technology to scale faster are the ones we prefer,” he said.
Large-cap IT stocks offer better downside protection
On the IT sector, Choksey acknowledged the recent divergence in earnings, with some mid-sized firms facing pressure while large players delivered steadier outcomes. He believes risk-reward currently favours large-cap IT stocks over mid- and small-cap names.Stocks such as Infosys, TCS and HCL Tech are trading at valuations that limit downside risk, he said, adding that mid-cap IT companies face much less tolerance for earnings misses.
Order wins, AI adoption support large IT firms
Choksey said large IT companies have demonstrated resilience through stronger order inflows across verticals, easing investor concerns. He also pointed out that labour cost adjustments have largely been absorbed in recent quarters, setting the stage for a cleaner outlook ahead.
“AI-driven coding is helping deliver solutions faster, while companies like TCS are moving towards capital-intensive models such as data centres, which adds long-term revenue visibility,” he noted.
Investment takeaway
Choksey’s strategy remains focused on lenders with fintech-led growth models and large-cap IT companies where downside risk is contained. “In the current environment, scale, technology adoption and balance sheet strength matter more than chasing aggressive valuations,” he said.